BSE Sensex Elliott Wave Short Term Count

Even though this is a short term count, the implications are long term, since this is a short term rally in a downward market.
My last count on October 31st was able to catch a 2000+ pt move in the Sensex. A full break up of this count is below in the first chart.

The second chart is the retracement stage of this move. The retracement count is picture perfect A-B-C-X-A-B-C which i think is almost complete with only a 3rd, 4th and 5th wave of the C pending, and I think will end approximately with the sensex @ 16200. From there we have 2 options

1.) We rapidly break the lows on the 23rd of November @ 15478

2.) The retracement is not complete. The caveat here is that retracements are harder to count and the current move that i have counted as A-B-C-X-A-B-C is part of a much bigger retracement. So that means we get a short term bottom @15478 ish  and then we might go above 16200.

Either way there is a short term top in the 16200 area which can become either a longterm top or a short term top.
Posted on Nov 28th at 2:20pm IST with Sensex@ 16085.90 
As usual realtime updates in the comments section.

The Bull Fighter

Like anyone else I am often asked as what I do for a living. My response?? "Bull Fighter".
The media constantly throws bullshit at people and it seems like my job (for those who seek to employ me) is to constantly fight this bullshit and try to provide an unbiased opinion on the state of the financial markets. The internet provides us with an easy opportunity to go back and check who said what, how it turned out and most importantly what their motive was when they said it. After some time bullshit becomes easier to spot.


In its purest form: My correspondence with a Bloomberg Editor. The same thing happens repeatedly, but i don't get paid to deal with it.

 In its most dangerous form: Famous Permabulls with an Agenda and market moving reputations.
Article: http://www.bloomberg.com/news/2011-04-17/dubai-stocks-offer-value-as-index-in-bull-market-templeton-s-mobius-says.html#
My comment on Facebook at the time.

 The DFM chart with April 18th marked is approximately 22% lower today and breaking historic lows!

Hopefully when the market gets bullish I will feel it coming and start fighting the Bearish Bullshit.

Hoping to stay the Bull*&%# Fighter.

BSE Sensex Fractal

A fractal is a pattern that repeats parts of its self within its self. I was introduced to the concept during my study of Elliott Wave.
There is a whole lot of computer generated fractals that you can google, which i find great for desktop backgrounds.
The reason for this post is that the intraday chart of the Sensex (top) looks very similar to the daily charts of the Sensex (bottom).

BSE Sensex Elliott Wave Count H&S

On August 5th i wrote about the head and shoulder pattern in the BSE Sensex. This pattern broke down soon after and a measured move from the breakdown would be 13000 ish . A natural progression of this pattern is also a test of the neckline after a breakdown from underneath. A textbook definition of this chart pattern can be found here. I waited for that test all of September but the closest it came was approx 17,250 on the 8th and 21st of September. The Friday close of 17,804 tested and closed perfectly on the neckline. In my post on October 9th the 2nd option which was short term bullish also talks about the head and shoulder neckline retest with a final target of 17800.
The chart below shows that this has been achieved.

Elliott Wave Count.
As per the 2nd option on the October 9th post, we revert to the September 11th Count. The move from the 15th of July to the 26th August is a red (1) and as expected the Red (2) has expanded and finally completed on the 28th October with the neckline retest discussed above. Red (1) and Red (2) currently seem like the first 2 waves of a 5 wave pattern, to the downside.  


This time i think there are no two options, just one.
DOWN
I think in the next 2-3 weeks we will be back at or below 15750.

S&P500 Musings

Below is a comparison of the spy in 2008 and now. The topping pattern came in the form of 3 peaks in 2008. The third peak shaped like a scissor blade followed by a decline, a slightly lower decline and then a 16 pt rally. The current top is similarly shaped with the latter half of the pattern seemingly more volatile. Totally surprising? Maybe not! Although the currently rally has come at an extraordinary pace (2.5 months vs 1 month), in form it looks just like the 2008 rally.

Fibonacci Observations.
The March rally in 2008 was barely a 61.8% retracement of the decline of that time. But if compared to the decline from the 2011 May highs (29.75pts) it is very close to 61.8% (18.39 as on 24th October) versus the 2008 retracement (16.15pts).
Of course, with the EFSF gimmicks the Oct 24th high is long gone, but we can now look to the 76.4% retracement level @130.16 which is not too far above, and should be tough resistance.

S&P500, Emerging Markets and a Famous Global Bond Fund

I started writing this blog to keep track of my own opinions and look back later at the madness that was. This post may serve just that purpose, as i attempt to reconcile the Elliott Wave count on the S&P500 ($SPY, $SPX) with that of an Emerging Market ETF ($EEM) and a famous Global Bond Fund that take pride in their fundamental bond selection process, currency allocations and other hedging strategies.
$SPY VS $EEM
From the 1st of Sep to the 4th of Oct the $EEM seems to have completed 5 waves down with seemingly perfect form and the $SPY over the same period has completed 5 waves but with a ton of rule breaking overlaps or 2 great counts for the $SPY are provided by Joe the ElliottTrader on Youtube.
Now introduce the bond fund with a very mild marked 5th wave or alternate counts in brackets, that shows that there is a possibility of a 5th wave that is yet to come.The only way i see a reconciliation between the three charts is for
1. The Bond fund to have a 5th wave down, as determined by the alternate count.
2. $EEM to have an extended 5th wave of which we have completed a 1st wave down on the 4th and a 2nd wave up today or on friday.
3. $SPY chop counted with a FLAT-W-X-FLAT, followed by a 5th wave of which we have completed a 1st wave down on the 4th and a 2nd wave up today as shown in the chart below. In this count all a=c with the exception of the a-b-c in the X-Y where c= a*76.4%

This would all go well with Robert Prechters "All the same Market " thesis, for an actual 5th wave lower, which i think could start today.

Any one of the below would invalidate the count.
1. $EEM gets above 38.24
2. $SPY gets above 119.56

BSE Sensex Elliott Wave Count Long Term

Well, its about time for another post!!
My last post on September had 2 Scenarios. The Market went with option 2 on the first move down to 16400 and managed to hold above 16200. My target for the A-B-C was 17600 which would have been a test of the neckline of the head and shoulder pattern. The market was was weaker than i had assumed. Since i had expected the A-B-C to break through the 11th Feb low, i had counted the low on the 26th of august as a sub-division Red(1). But since the ABC did not break the 11th Feb low (17295.62) i can now count the 26th Aug Low as a Green(3). This means the count changes and the september 21st high is a Green(4), instead of a Red(2).
The new count is below and the old count from the last post is here. I will not attempt to label the short term subdivision right now but will do that in later short term posts, as the market starts moving.


Starting with the higher probability of the 2 Scenarios:
1. We shall start a decline immediately.
My target for this decline is the a measured move from the mini head and shoulders pattern (white box, 11th Feb 2011 - 4th Aug 2011) is (14,450-14,750).

2. If we go over 16750, the Green(4) is most likely not complete and will extend further into the 11th Feb (17299.25 territory) and a final target of 17800 may be reached. In short we would revert to the 11th September count with a slightly raised target due to a slanting head and shoulder neckline.